How does Murugappa Group keep everyone in the family happy?

By and large, the seniors in the family, if sources are to go by, have ensured that they have minimal differences among themselves. (Photo by Joey Kyber from Pexels)

The Hindu, TVS and Murugappa are iconic names in Chennai. They have something in common. Each one of them has four wings (rather families) within.

In a larger family business conglomerate such as these, frictions aren't uncommon. But how do they stay together despite that?

In the case of the TVS, the four families had for long an informal arrangement. Each one managed the companies they were running independently though there were cross-holdings between the companies managed by each family. Recently, they got together to legalise their informal divisions. Accordingly, cross-holdings were removed and each family has been allowed to manage the companies they are running hitherto independently. That was a smooth transition.

Read also: CUMI buys Rhodius at an enterprise value of Rs 464 crore

While that is commendable, it is Murugappa Group that appears to have struck gold when it comes to keeping all in the family happy and united. Notwithstanding the occasional disagreements, everyone seems to have stayed on board.

Insiders told Moneycontrol that their secret is Murugappa Management Services (MMSL).What is this firm?

 The Murugappa group has been having this management-services company since the `70s. It was registered in July 1972 as an unlisted, public limited company. It changed its structure in February, 2022, when it was incorporated as a private limited company.

None of the family members are associated with the company, said our sources. None of them are on its board either. Its shares are held mostly by listed companies of the Murugappa group. If sources are to go by, each holds less than 20% shares in it.

Ranking officials of some of the listed Murugappa firms are drafted as directors on the board of this management-services company. This way, it has helped the group skirt questions on related-party transactions.

A public limited company attracts extra compliances and is automatically seen in a good light. Perhaps that is what encouraged the group to opt for that structure for MMSL, when it was founded.

Moneycontrol had reached out to the Group but received no response.

Five decade-old outfit
MMSL acts as a vendor to the Murugappa Group firms, providing facilitation services such as office security, guest-house upkeep and travel bookings. It was earlier known as Tiam House Services Ltd.  It underwent a name change to the present one somewhere along in the`90s.

Senior members, who have retired but continue to provide their time and guidance, get compensated through MMSL company. “Often, retirees continue to guide the group businesses and their reward is routed through MMSL,” a source said while not willing to be quoted.

The Chennai-based group was, perhaps, the lone business family in the country where its members chose to move out of the management after reaching the superannuation age of 65 years. However, with the dismantling of the Murugappa Group Corporate Board some time ago, a few members have returned to active management after 65 years.  Perhaps, the context has changed. Maybe, it has been done to usher in a new order.

Read also: Tube Investments of India set sup new arm to focus on clean mobility

Our sources also suggested that some younger family members have also been provided with limited amenities by this company. This has been the practice for many years now.

Brighter ones in the family naturally get into frontline companies in the group such as Tube Investments, CUMI, Cholamandalam Finance, EID Parry et al. Still others are accommodated in estate companies of the group. For the rest, there is MMSL.

“This way, everybody is accommodated in some way or the other,” said another source. This accommodation policy is besides the regular dividend that the family members get from the holding company of the group for their share of equity.
 MMSL has remained a vehicle that bound the family together all these years. This has been confirmed by a couple of sources who worked closely with the family members for several years.

Other binding factors
By and large, the seniors in the family, if sources are to go by, have ensured that they have minimal differences among themselves. Also, the fact that they are largely public-shy has in several ways held the group together and ensured that the Murugappa group does not come under undue public glare. Not just that.

“They are very simple and live within their means and are not ostentatious,” said a former top official of the group.
 The Valli imbroglio 

 Coming as it did against this widely-held perception, the move by Valli Arunachalam, daughter of late M.V. Murugappan (who was the chairman of CUMI), to move the court to secure her legal right in the group has taken the corporate world by surprise.

Insiders do aver that the female members of the Murugappa clan are kept away from the family business. “The women have no role in family business but are encouraged to participate in the group’s social activities,” said a source.

Is the assiduously-built `management-services’ outfit not able to fix the Valli imbroglio? Long-time watchers of Murugappa group don’t have an answer. With GenNext slowly coming to the fore, the Murugappa group is transiting to a new order
 Century-old history

Founded in 1900, the Rs. 417-billion (Rs. 41,713 crore) Murugappa Group has 29 businesses, including ten listed companies.

The Murugappa Group began as a banking enterprise in the pre -World War 1 era in Burma (Myanmar). “Shifting to India during the turbulent war years, the Group established its base in the South. It grew by leaps and bounds, building strong, market-leading companies in critical sectors like agri-solutions, financial services and engineering,” the official website of the company said.
 The over 100-year-old group has been a role model for family business in many ways. Nevertheless, managing multiple wings of a family in a dynamic environment is going to remain a daunting part of a business.